Rolling Out Sales Compensation Plans – Are You Ready?

by Pablo Dominguez

As you wrap-up up planning for the new fiscal year, here are 3 things to consider to ensure you have a successful sales compensation plan launch.

Communication

As a sales person, the only thing worse than not knowing what you are supposed to be selling is not knowing what commission you earned after making a sale. Whether Sales Leaders are rolling out new plans, minor changes to current plans, or not making any changes, it is imperative that you invest the time to effectively communicate the compensation plans to your teams.

A few things to consider:

  • Leverage front line sales leaders to help communicate the compensation plans to your field teams
  • Reinforce what has changed and WHY it has changed – tie any changes to the company strategy
  • Provide clear documentation on the compensation plans and any policies
  • Allow for a Q&A session as part of the rollout

Administration

Depending on the size of your sales team and the number of compensation plans, you may be using different tools to track and report on quota performance. It may be Excel, an off the shelf solution (Xactly, Callidus), or perhaps a home-grown solution. Regardless of what you are using, consider the following:

  • Ensure you can measure and track all the inputs for your compensation plans (e.g., bookings, units, profitability, renewals, etc.)
  • Consider timing on calculating your commission payouts; consider the time to close out financial results for a month, dependencies on other functions
  • Do your reps have visibility into their performance on a daily, weekly, monthly, quarterly basis?

Diagnose

Don’t fall trap to the “set it and forget it” mentality. While you shouldn’t pivot and change your compensation plans every time there is “noise” in the system, it is important to leverage data insights to assess the efficacy of your compensation plans and to validate that you’re incentivizing the behavior that you believe will yield what you want to accomplish. Depending on your company’s sales cycle, solution type, and customer size, the desired results of your compensation plan may be quickly revealed, or they may take time to marinate.

We suggest the following:

  • Perform analysis regularly (minimum monthly) to assess performance across your reps
  • Strong or poor performance may be a result of things other than the compensation plan (e.g., product, pricing, competitors). Leverage your data to determine the root cause of any potential gaps.
  • Build a process so that Sales, Sales Operations, Finance, and HR can review and align on all final payouts and review any outliers
  • Be prepared to make changes when necessary; and remember to communicate to your field teams if you do make any changes

Start strong to finish strong

Rolling out your sales compensation plans effectively can be the difference between a strong start to the year or a bumpy start. Having your entire sales organization aligned and focused will ultimately help yield stronger results for your teams. Good luck in the new year!

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Pablo Dominguez

Venture Partner

Pablo Dominguez joined Insight in 2018 as a Venture Partner. Pablo focuses on partnering with Insight’s portfolio companies to build and scale effective commercial teams through the application of proven and repeatable go-to-market and operational best practices. He brings over 20 years of…

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